TULLY cane growers are hammering their local mill to honour commitments made by new owner, COFCO, when the mill was purchased. If those committments are not honoured it will cost local growers millions of dollars in lost revenue every year.
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CANEGROWERS says that unless the Tully Sugar mill honours the written commitments made by new owner COFCO when the mill was purchased, local cane growers will be forced to absorb some $3.25 million in lost revenue. Meanwhile, the mill stands to gain by some $4.95 million.
When purchasing the mill COFCO identified the opportunity to expand. It was something the local sugar industry saw as important for the health of the mill and Tully community.
Expansion in cane without matching milling capacity is well-known to strip away profitability of existing growers while the mill gains financially. Written assurances given by COFCO during the acquisition of the mill and their intentions clearly outlined in the bidders statements, assured CANEGROWERS that mechanisms would be put in place to ensure growers would not be disadvantaged.
On that basis local growers are already half way through implementing a $33 million investment in the expansion being planned.COFCO had made early overtures to reassure growers that they would not be disadvantaged.
“Cane growers are paid on sugar content,” explains CANEGROWERS Tully Chairman, Tom Harney.
“The sugar content in cane changes throughout the season. It usually starts low, increases to a peak then declines again.
“This is entirely dependent on weather patterns and in Tully the usual patterns mean the ideal harvest is 22 weeks starting in mid-June and going to mid-November,” Mr Harney said
Expansion means more tonnage to be milled which results in a lengthened season.
“By adding on additional less profitable weeks at the beginning or end of the season, overall sugar content across the season can be severely lowered, meaning existing growers get paid less for their usual crop,” says Mr Harney.
“Unduly long season lengths cause lower yields in subsequent seasons. There can be additional costs due to loss of future ratoons.”
Operating later in the season also brings with it a far greater threat of the wet setting in, which can force the mill to close early, before the entire crop is processed. This can mean cane is left unharvested in the field.
“We’ve run the numbers, and for the 2.5 week season extension on the cards for Tully, the total loss of revenue to growers could be in the order of some $3.25 million per year.”
The issue has united growers in the Tully area. They are concerned that if the mill does not match the land expansion with extra crushing capacity, the future for the next younger generation of cane growers will be bleak.
While the mill has offered some limited concessions, CANEGROWERS Tully says it is not enough and is urging the mill to honour the original commitments made by the owner when they first talked with industry about expanding.
“CANEGROWERS wants full agreement in the cane supply agreement that any expansion in cane area be matched by an equivalent (not partial) expansion in local milling capacity, to achieve acceptable season length,” Mr Harney said.
“Alternatively, we could come to agreement for a temporary increase in season length if growers who are disadvantaged financially by expansion, were to receive agreed compensatory measures to the equivalent of the disadvantage suffered.
“This would include compensation for loss of sugar content, loss of future yield and cane left unharvested.”
CANEGROWERS says this issue can and must be fixed soon saying that if the original commitments made when purchasing the mill could be agreed and written into local growers’ cane supply agreements.
Both growers and the mill would have the confidence they need in the future of sugarcane to make the ambitious Tully expansion plan work for all stakeholders and the local community in which they operate.
